Feature

What next for IndusInd Bank?

Grappling with bad loans, weak loan growth and leadership uncertainty, its valuation is under pressure

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It’s now an accepted fact that Indian banks leave too much to be desired in terms of maintaining clean books. One of the most high-profile bankers fell from grace due to his willingness to take on risky exposure for quick profit. Not just that, even public sector banks such as SBI and PNB have been flagged for under-reporting FY19 bad loans by Rs.120 billion & Rs.62 billion, respectively. However, not much hue and cry is made about the lack of accountability, sleight of hand and poor governance at PSU banks. NPAs at private banks, on the other hand, attract more attention and scrutiny due to their premium valuation. Hence, investors were alarmed, in April 2018, when the RBI announced that IndusInd Bank had reported non-performing asset (NPA) divergence twice — in FY16 and FY17. It essentially meant the bank was under-reporting risky exposure and rising bad loans.